Shifting trends in Risk Management in Financial services market, OFSAA to play key role!
Guest post by
Ankush Agrawal, Associate Consultant, Oracle Practice, Infosys
Risk management has always been of prime importance for any industry and more for financial services markets. The financial crisis exposed inherent weaknesses in the risk management system, like outdated systems and processes, poor decision-making, inadequate forecasting, and reporting structures. The negative impact of these flaws on many institutions shocked the industry, and as a result, there has been a shift in attitude toward risk and it has started getting more attention.
The areas of risk management that have emerged or got more attention in recent times are:
- Regulatory uncertainty - As we move ahead Regulatory requirements are continuously going to change, as and when the system identifies the loopholes.
- Credit risk - Though credit risk is the most inherent component for Risk management in banking and Capital markets but after this down turn it has become the main point of reference.
- Compliance with new capital requirement - Capital requirement has also changed and BASEL III guidelines are already released.
- Increasing competition and falling Interest margin due to volatility in interest rates.
- Liquidity risk.
- An integrated IT system that can adapt to the above changes.
There are many lessons to be learned from the crisis. The cost of risk management Practices is continuously going to increase with changing regulatory norms and evolving risk management practices. This is the main reason why technology and IT system plays big role in the Risk management system. our IT system should be such that it can support the changes with the changing risk management practices with minimal cost.
OFSAA (Oracle Financial services Analytical Application) is one such tool which provides great flexibility to the organization to comply with changing Risk management practices; OFSAA is Oracle's integrated risk management application for banking and financial services companies. It can easily incorporate changing trends and requirement in risk management with minimal effort in terms of cost and time.
Features of OFSAA:
- Lower the costs of compliance and regulation.
- Promote a transparent risk management culture
- OFSAA ALM Module helps in complying with asset liability policies and requirement.
- Integration of Risk, Performance Management, Customer Insight, and Financial Compliance
- Managing the market and rate risk of the bank's balance sheet
- Centralized Interest Rate Risk - Oracle Financial Services Funds Transfer Pricing isolates each source of interest rate risk and concentrates rate risk management in your bank's funding center.
- The Retail credit risk solution allows organizations to quickly identify and comprehensively evaluate potential credit risk portfolio problems from multiple product- and enterprise-specific perspectives.
It is not that the risk management practice that we adopt now will always work in future and it will be full proof, it will continue to evolve with system exposing the weakness in it. Important thing is to have a system that can adapt the changes according to the changing needs and Practices Followed in Risk management practices.
